The Pension Protection Fund (PPF), which monitors the position of the private sector final-salary pension schemes, stated that in May the collective deficit of the 7,300 schemes it monitors had widened to £42 billion from a deficit of just £2 billion in April. However this position is much improved compared with a combined deficit of £179 billion. The PPF says the increasing deficit of the past month was due to falling asset values such as shares.
This uncertainty on fund performance combined with fixed, and possibly increasing, liabilities placed on these final salary schemes places further pressure on employers to move towards defined contribution (money-purchase) pension schemes. This will see the liability of a pension funding shortfall move from the employer to the employee and it is imperative that any individual has a sufficient retirement plan in place to meet their individual requirements.
